The Analyst Calling The End Of The Commodity Boom Has Made One Spectacularly Timed Call You Need To Know About

The big news in the world of Wall Street calls today was
Citi's Edward Morse calling the end of the commodity
Super-Cycle. The argument, basically, is that the age of
investment-led Chinese growth is over (giving the way to
household consumption-led growth) and that this shift would have
a profound negative impact on the rate of demand growth in all
sorts of industrial commodities. Add in booming supply in more
areas (E.G. Iraq and US oil) and you have the case for the end of
the great commodity bull run. And really this is huge given how
long the commodity bull story has been a thing.

So should you listen to Morse?

Well beyond the logic of his call (which is spelled out in a note
that's over 100 pages) he also has one well-timed call to his
name

Take a time machine back to 2008, back when he was at Lehman, and
oil was going into the nosebleeds.

When will oil's visit to the stratosphere end? Almost to a man
(and woman), the oil watchers of Wall Street say the question
cannot be answered, even though the price per barrel slid more
than $10 on July 15 and 16. There are just too many factors
propping up crude even to contemplate a dramatic decline.

But Edward L. Morse, Lehman Brothers' (LEH) chief energy
economist, says the oil bubble (he dubs it Oil Dot-com) will
burst by New Year's. Not only that, he predicts a plunge to about
$93 a barrel. Pretty audacious as prognostications go, at a time
when Goldman
Sachs (GS) foresees $200 a barrel. To that Morse just replies
that he's the one talking sense. "We are trying to keep our heads
in a wild market," he says.

Some of his reasoning sounded familiar (a negative take on
Chinese demand, etc.) but his timing was definitely spot on, and
if anything he was way too optimistic.

So it will be interesting to see if this plays out again. On the
one hand, he's made a very similarly themed call before. On the
other hand, he made a good comparison at a good time.